Competing within a changing worldA Rolls-Royce case study

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Page 1: Introduction

No business today operates in a complete vacuum unaffected by market forces. By their very nature business activities are competitive. Within a dynamic, rapidly changing business environment producers are constantly entering and leaving the market. At the same time, changing customer preferences provide signals for businesses to develop new strategies with different products and services. Some businesses will succeed by responding to and meeting market needs, while others may not perform quite so well.

Few markets have changed in recent years as much as civil aerospace. Ten years ago 950 million people travelled by air; five years ago they numbered 1.1 billion and the total is set to climb to 2.5 billion by 2009. The aviation industry provides more than 24 million jobs worldwide, while its contribution to the world economy is estimated to rise to $1,800 billion by 2009. Today, one-third of the world’s manufactured exports are transported by air. Twenty years ago the proportion was just one-tenth.

Growth in civil aviation markets has stimulated the competition between the businesses that operate in it such as the airlines. This has a knock-on effect on their suppliers - the aeroplane manufacturers - and in turn on their suppliers - the engine manufacturers.

Rolls-Royce is one of only three engine manufacturers in the world that has a proven capability to design, develop and produce large gas turbine aero-engines. In recent years the company has faced many challenges that have affected its position in the aero-engine industry.

By providing an analysis of the competitive environment affecting Rolls-Royce, this case study illustrates how such information is being used by the company as it works towards its vision of becoming the world’s first choice for power solutions for the new century.